Buying a Home With a Friend or Sibling in BC: Co-Ownership Basics

Sharing a purchase with a friend or sibling can make a home affordable, but it also ties your finances and your future to another person. Questions that feel awkward before you buy, such as who pays what and how someone leaves, are much harder to answer after a disagreement.

This article walks through how title can be held, how to reflect unequal contributions, a few tax points that differ for siblings and friends, and what a co-ownership agreement usually covers.

This article covers the law of British Columbia.

Choosing how to hold title

Where land is transferred to two or more people, they are tenants in common unless the instrument shows a contrary intention. If the interests are not stated, they are presumed to be equal. Unequal shares are possible only if the shares are stated.

A true joint tenancy requires identical interests, and when one joint tenant dies, the right of survivorship passes the interest to the survivors. If there are more than two joint tenants, the survivors continue to hold as joint tenants after one dies.

Unequal contributions

If one of you puts in a larger down payment or pays more of the mortgage, stating the shares on title is one way to reflect it. For example, if A conveys a quarter interest to B, A is registered as to a 1/4 interest and B as to a 3/4 interest. Even so, shares on title and the real financial arrangement should match, so record who paid what in writing.

If a co-owner pays more than their share of the carrying costs, they may apply to the Supreme Court for relief, and the court may order the defaulting owner's interest sold. One co-owner can also bring an action of account against another.

Tax points for siblings and friends

• The related individual list under the Property Transfer Tax Act includes a spouse, children, grandchildren, parents and grandparents, among others, but siblings are not in the list.
• Siblings can qualify for the family farm exemption, which has farm conditions, but not the general principal residence exemption.
• When someone is added to title, an exemption is claimed only on the part of the interest coming from related individuals, and tax is payable on any interest acquired from an unrelated owner.
• A gift of capital property is treated as a sale at fair market value for federal tax.

Rates and other exemptions change by year, so ask a lawyer or accountant what applies to your purchase.

What a co-ownership agreement should cover

Title records who owns what, but not how you will live together as owners. A written co-ownership agreement fills that gap. Because one owner can sever a joint tenancy by transferring their interest to themselves, which turns that share into a tenancy in common, a joint tenancy can change without the other owner agreeing. A mortgage of one owner's interest also requires severance. Judgments work differently: a judgment against one joint tenant does not sever the joint tenancy.

• Each owner's share and how it was calculated.
• Who pays the mortgage, property tax, insurance and repairs, and what happens if someone misses a payment.
• Whether either of you can sell, mortgage or rent out your share, and whether the other has a first chance to buy.
• How the home is valued if one buys the other out.
• What happens on death, bankruptcy, marriage or a move away.
• How disputes are handled before going to court.

Planning the exit and next steps

Without an agreement, an owner who wants out may rely on the courts. Joint tenants and tenants in common may be compelled to partition or sell the land. If interested parties holding at least half the property request a sale, the court must order it unless it sees good reason to the contrary, and it may order a sale despite another owner's objection. Setting exit terms in advance is usually cheaper and less stressful.

Before you buy, decide on the form of title, write your agreement, make or update your wills, and have a lawyer review both. Check your mortgage terms too, since lender consent to title changes is a contract matter.

Frequently asked questions